Enforcement: Germany's BaFin bans company - and names fake regulator
"The employees of Lance Futures have been cold calling people to encourage them to purchase gold options. During the telephone calls, the callers from Lance Futures advise potential clients that they can verify on the website of the Frankfurt Financial Supervisory Authority (FFSA) that Lance Futures is a licensed financial services institution. The FFSA claims to be Germany's primary financial regulator. However, no supervisory authority by the name of "Frankfurt Financial Supervisory Authority" exists in Germany." So says Germany's real financial regulator, known (because only Germans can say or even remember its name) as BaFin.
By notice dated 9 November 2010, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) prohibited Lance Futures from providing investment broking services without the requisite authorisation. It further prohibited the Frankfurt Financial Supervisory Authority from involvement in the initiation of Lance Futures' unauthorised operations.
There is a problem: the fake FFSA has the same initials (in English) as the real regulator. And so, references to the FFSA have a high degree of credibility to victims from outside the industry.
Fake regulators are nothing new: BankingInsuranceSecurities.Com has listed many since it was formed (under a different brand) in 2002. And organisations seeking to bolster their reputation by reference to the fakes is also not new: think back to the First International Bank of Grenada for an object lesson - although the regulator was real, the surrounding infrastructure was a collection of shell companies.
There is, BaFin is certain, no danger that they are wrong and that the operators of the scheme are genuine businessmen. BaFin says it "took steps to block the websites www.lancefutures.com and www.ffsauthority.com, whereupon Lance Futures and the FFSA registered new website addresses with the same information at www.lance-futures.com and www.ffs-authority.com. These sites have since been shut down as well. However, it is to be expected that the persons responsible will attempt to continue their illegal operations under new website addresses."
BaFin issued a statement on its actions on17th November and says that the notices are immediately enforceable by operation of law but are not yet final and absolute.
In its statement it says "The employees of Lance Futures have been cold calling people to encourage them to purchase gold options. As such, Lance Futures is performing investment broking services without the requisite authorisation from BaFin. Lance Futures' website indicates that its office is located at Mainzer Landstraße 10-14, 25629 Frankfurt am Main. There is no such post code or street address. Lance Futures is not registered in the commercial register, nor has it disclosed its legal form."
Download PDF version of this page